An auditor has unearthed a Tk 2,947 crore discrepancy in the customers' security deposit of Titas Gas Transmission & Distribution Co Ltd.
This issue came to light through the auditor’s qualified opinion, published on the Dhaka Stock Exchange (DSE) website on Monday following a review of Titas Gas financial report for the year ending on June 30.
A qualified opinion is a statement issued after an audit, completed by a professional auditor. This suggests that the information provided is limited in scope or the company being audited has not maintained generally accepted accounting principles.
According to the auditor, Titas Gas Transmission & Distribution Company's long-term liabilities as disclosed in the financial statements include customers' security deposit of Tk 2,947 crore until 30 June, 2023.
The company head office maintains control ledgers with the information received from zone offices. But during an audit at zone/RSO offices, the auditor found some differences.
Due to delay in payment of bills by the bulk customers, the company calculates and charges penal interest on the bill amounts of the respective customers. As such, a total amount of Tk 129 crore was recognised as interest income up to June 30, and included in Trade Receivables.
On the other hand, the company accounted for meter rent and demand charges on its customers. Namely, PDB for Tk 187.89 crore and EGCB Demand charges for Tk 21.69 crore up to the year 2022-23.
Furthermore, the company accounted for another income of Higher Heating Value (HHV) from its Private Power customers amounting to Tk 38.84 crore up to the year 2022-23. The company has been recognising these income and receivables since the year 2002.
As per the auditor, out of the said aggregated amount of Tk 378.04 crore, there is no realization till date.
On a query, the auditor came to know that the said customers are not interested to pay such penal interest as well as meter rent, demand charges and high heating value which remain unrealized for long.
As a result, there is a substantial doubt as regards realization of the said penal interest, meter rent, and high heating value receivable which require full provision in the accounts.
The auditor has also given an opinion about the information given in the financial report regarding Titas Gas Transmission & Distribution Company keeping Tk 58.61 crore Fixed Deposit Receipt (FDR) of Padma Bank.
Titas Gas Company should have kept a provision for this matter, as per the auditor.
Tk 58.61 crore as disclosed in investment in FDR with Padma Bank Ltd (formerly known as The Farmers Bank Ltd). Because of weak credit worthiness of the said bank, there is a substantial doubt over realisation of the said investment, which requires FDR provision in the accounts.
After paying tax, in the July-September period of FY24, Titas Gas net profit stood at Tk 6.92 crore, and the earnings per share (EPS) stood at Tk 0.07, which is lower than Tk 0.26 in the same period of the previous year.
The company’s net asset value (NAV) per share was Tk 72.01 as on September 30, 2023 and Tk 71.75 as on June 30, 2023. Titas, which got listed in 2008, was welcomed by investors as they had paid significant attention to the company's stocks at the time of its listing.
Titas stocks also attracted foreign investors with its guaranteed market, fixed profit margins, and consistent cash dividends at the time.
But later the foreign shareholders have also reacted immediately by selling Titas stocks and their trust in the state-owned enterprise has yet to be restored.
As on October 31, 2023, the government held a 75 per cent stake in the company, while institutions owned 15.05 per cent, foreign investors 0.17 per cent, and the general public 9.78 per cent.
The company's stock was traded at Tk 40.90 per share on the DSE trading floor on Sunday.